MercoPress. South Atlantic News Agency

Argentina's inflation controversy expands; IMF rebutted

Argentina's controversial Statistics and Census institute, Indec, further fueled dispute over the accuracy of official data when it announced that the January consumer price index, CPI, rose 0.9%, the same percentage as November and December and well below reliable private estimates of 2%.

The 0.9% index is also below that of January 2007, accumulating 8.2% in the last twelve months and seems to ignore significant increases in transport, tourism and food items. The announcement also helped to discredit the incoming economic team of President Cristina Fernandez de Kirchner who had promised an in depth review of Indec calculating systems that have been at the heart of a long dispute with staff from the institute, labor unions, members of the opposition, the business and banking community plus such multilateral organizations as the IMF which openly questioned in a letter, the reliability and accuracy of the official data. Professional staff removed from Indec all along 2007 "to improve operations" estimates that Argentina's inflation last year was in the range of 22 to 26%. Ecolatina a respected private consultant belonging to former minister Roberto Lavagna estimated 2007 inflation in 23.7% and forecasts over 20% this year. Indec also revealed that wholesale prices rose 0.7% in January over the previous month and 15% in the last twelve months. Some of the most controversial numbers of the January index refer to urban transport which are administered prices and on average increased 22% on Jan first. This only over the board increase represents 0.8% for January's CPI, according to private estimates. However Indec calculated that transport rates on average rose 11.1% equivalent to CPI's 0.28%. This does not include a 5.3% fuel rebate for urban passenger transport which the Kirchners' administrations subsidize. Another area of dispute is the item food which according to Indec increased 0.7% based on a mix of some fruit and vegetables that increased (onions, lemons) and others that dropped (tomatoes, plums, zucchini). However private estimates, more precisely from a consultant that monitors supermarkets in Buenos Aires city and metropolitan Buenos Aires, the food basket climbed 1.49% in January. But for Indec the increase was only 0.78%. Nevertheless Indec admits that the basic food basket which helps measure indigence and poverty actually jumped 1.26% because of the transport hikes. Tourism figures are also under dispute: for Indec it was 5.9% which is hard to believe with an economy growing for several years at over 8% and with a significant component of domestic demand to boost it. In related news the Buenos Aires press reports that Indec replied to the IMF methodology clarification request saying that there's nothing wrong with the data released. Clarin and El Cronista both reported Friday that Indec director Ana Maria Edwin, dismissed every single claim raised by the IMF. There had been no changes in methodology for the consumer price index, Edwin reportedly said, addressing each of the components of the index about which the IMF had expressed concern. She did note that future changes were being studied, however, an apparent reference to plans to introduce a new CPI. Clarin also said Edwin denied there'd been a breach of confidentiality with sources used in elaborating Indec's CPI and as to the redeployment of staff, she reportedly responded that human resource decisions were an internal matter for the agency to decide. Allegations that Argentine government officials have directed professional staff to understate CPI data have prevailed ever since the Kirchner administration reshuffled Indec management in January last year.